Integrate Byline Choice with airSlate SignNow

Integrate byline choice

okay hello and welcome everyone so the title of this lecture is choice which is also that the chapter title from variant from variants intermediate micro basically what we're doing is we're thinking about the consumers utility maximization problem remember the way that we phrased this is we have a consumer who's trying to do the best they can given the circumstances the best they can as rep is reflected by their preferences sort of reinforced and then modeled using utility functions and given the circumstances is coming from the budget constraint so we were gonna think about what's the optimal bundle that the consumer is going to choose given what their preferences are and given the prices and income that they've got at their disposal this is ultimately going to comparing the slope of indifference curves the marginal rate of substitution to the slope of the budget constraint to the price ratio and at the optimal assuming well behaved preferences we do have a point of tangency where the line tangent to the utility to the indifference curve at that particular point is also going to be coincident with the budget line that's not going to happen in all cases and indeed I'm going to cover what we do in the situations where there's going to be a non tangency all right so we are now ready to determine how a consumer with a particular set of preferences would choose a bundle given a particular budget constraint previously we've talked about what what trade-off the market will allow the consumer to make or the market will force the consumer to make given what what are the prices and given what's the consumers income available the basic idea is there is a rate of trade-off the consumer would face if they were to be currently exhausting their budget but then give back some of one good well that would free up some money to allocate to the other good and the rate at which that happened comes from the slope of the budget line the price ratio we also have the slope of the consumers indifference curves their m RS which tells us the trade-off the consumers willing to make such that they remain on the same indifference curve and then we're combining these two together basically comparing them when they're equal we've got a tangency and then we've got the kit well we've got the consumers optimal bundle and I'll show what happens and what logic we can borrow in the situations where that doesn't happen so we're I'm gonna start from to kind of build this logic cuz I'm gonna say suppose we have some consumer with these nice well-behaved preferences there monotonic and they're convex monotone meant that we preferred more to less so if you had two bundles that had the same amount of both and now you give the second bundle a little bit more of one of the goods you have to like that...